XCHRX PAN GLOBAL DEVELOPMENTS LTD. v. ANNETTE FAY FANG

1997, No.A8059

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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Application for judgment

1. The Plaintiff is the registered owner of Block 6, Flat 18A, Cavendish Heights, 27 Perkins Road, Hong Kong ('the Property"). The Plaintiff seeks, among other things, final judgment pursuant to O.14 against the Defendant for possession of the Property.

2. The Defendant is the former wife of Mr Joseph Kwei-son Fang ("Mr Fang"). The Property is beneficially owned by Mr Fang and was the matrimonial home of Mr Fang and the Defendant. As part of the settlement in the divorce proceedings in 1990, Mr Fang agreed to procure the Plaintiff to grant a licence ("the Licence") to the Defendant to occupy the Property. The Licence is annexed to the "Heads of Agreement" and it stated that the Licence was for the period from 14th March 1991 to 31st December 1996. The Licence expired on 31st December 1996 but the Defendant continued to stay at the Property.

3. The pleaded case of the Plaintiff (para.5 of the Statement of Claim) is that :

"The Licence was extended until 31st July 1997 on condition that the Defendant vacate the Premises on or before 31st July 1997 ('the extended Licence Period'). By letter dated 8th May 1997 from Messrs Hampton, Winter & Glynn as solicitors for the Plaintiff, the Defendant was asked to confirm she would quit the Premises by 31st July 1997. Further by letter dated 16th July 1997 from Messrs Hampton, Winter & Glynn the Defendant was given further notice of her obligation to deliver up vacant possession of the Premises by 31st July 1997."

Defendant's case

4. The Defendant's case is that the question of the occupation of the Property by her and her children is linked to the matrimonial settlement. In relation to the Property, her case is that while the Licence granted her a rent-free occupancy period until 31st December 1996, it does not mean that the occupancy would terminate on that date. After that date, she could continue to occupy either by paying rent, or if Mr Fang postpone payment of the lump sum of US$250,000, which the parties agreed in the settlement that he would pay to her when she vacated the Property.

5. What happened in this case is that on 2nd September 1996, Mr Fang wrote to the Defendant. In that letter, after reminding the Defendant that the Licence was to expire on 31st December 1996, Mr Fang stated that :

"If you so desire, you and the children may stay at Cavendish, rent-free, until July 31, 1997. I have made alternative plans for Cavendish shortly after that date.

I make this concession only on your agreement that you will vacate the flat before July 31, 1997. If you should continue to occupy the flat after that date, I shall have to charge you rental at market rates starting August 1, 1997. This will be taken out of the US$250,000 which would have been due to you had you vacated the flat on or before December 31, 1996, as originally agreed."

The Defendant wrote back on 23rd October 1996. It was stated in Paragraph 11 of her Affirmation that :

"I wrote JKF [Mr Fang] on 23rd October 1996 to thank him for extending our rent-free period, but informed him that I did not agree that any deduction be made from my lump sum even if we were to stay past 31 July 1997. I also asked what arrangements he had in mind for housing and schooling for the children should we vacate by 31 July 1997 and mentioned that I was assuming the bank guarantee would extend until the date we chose to move. I had no response from him until 9 April 1997, when JKF falsely claimed 'absence of comments' from me as his rationale for his making 'other arrangements regarding the flat'. I refuted his allegations with my reply dated 16th April 1997."

6. I will now refer to Mr Fang's letter of 9th April 1997, the second paragraph of which stated that :

"In the absence of any comments from you, I am acting on the assumption that you will be vacating the flat on or before July 31, 1997, and have made other arrangements regarding the flat. I sincerely hope that we will not encounter any unpleasant surprises come that time. So please make your plans as soon as possible, because Cavendish will no longer be available after July 31, 1997."

The letter dated 16th April 1997 from the Defendant stated that :

"... This is the first time (April 10, 1997) that you have mentioned this point. You state that your offer to let us stay in Cavendish is 'contingent on our establishing a formal Agreement' that we 'would vacate the flat by July 31, 1997.' There is no such agreement."

The Defendant further said that the Licence is tied up to the question of the bank guarantee which Mr Fang had agreed to furnish in relation to the lump sum payable to her. Mr Fang should have extended the guarantee up to the end of the rent-free period. This had not been done. Mr Fang had, further in breach of the settlement, failed to provide life insurance coverage for the Defendant and the children or cancel his own spouse's insurance claim and that he also failed to provide maintenance for one of the children of the family.

Licence validly terminated

7. For the purpose of this application, I proceed on the basis that the Plaintiff is controlled by Mr Fang. This is not disputed by Ms Cruden. But even on that basis, the first question to be asked is : was the Licence validly terminated on 31st July 1997? In my view, it was. The recital clause of the Licence stated that the Licence was supplement to the settlement between Mr Fang and the Defendant; the grantor of the Licence was the registered owner of the Property and that it wished to grant the Defendant a licence to occupy the Property. Then it went on to say that :

"In consideration of the premises, the Grantor [the Plaintiff] shall grant unto the Grantee [the Defendant]free of any payment to the Grantor a licence to occupy and to have exclusive possession of the said premises from the date hereof until the 31st day of December 1996 ('the licence period')"

The Licence was clearly not intended to be permanent in nature. The Licence expired by effluxion of time on 31st December 1996. On the evidence before me, I have to proceed on the basis that the Licence was later extended to 31st July 1997. The Defendant argued that the extension to 31st July 1997 only concerned the question of rent-free occupation. I do not see from the correspondence that the extension to 31st July 1997 was restricted only to the issue of rent-free occupation. Although in the letter of 2nd September 1996, Mr Fang referred to the fact that he would be charging rent after 1st August 1997, this followed from the earlier statement in the same letter that the concession made by him to let the Defendant occupy the Property rent-free until 31st July 1997 was on her agreement to vacate the flat before 31st July 1997.

8. The termination of the Licence and the requirement of the Defendant leaving the Property on 31st July 1997 were abundantly clear. The correspondence revealed no agreement thereafter allowing the Defendant to occupy the Property. On the contrary, the letters from Mr Fang and his solicitors showed clearly that the Defendant had to leave on 31st July 1997. I cannot see any triable issue on this matter.

Maintenance

9. If the Defendant is to leave the Property, then a question may well arise about the maintenance of the children, including additional costs of alternative accommodation. This is a matter that the Defendant has to seek legal advice to see whether applications should be made to vary the terms of the settlement between her and Mr Fang on the issue of maintenance. But this is not a matter that I could deal with today. After all, I am not seized with the issue of financial settlement between the parties. Likewise, the failure of Mr Fang to provide for the insurance coverage and the maintenance of the daughter, if these allegations were true, have to be pursued in a different proceedings.

Guarantee

10. Regarding the question of guarantee, it would appear that even on the Defendant's case, at most the guarantee would only be extended to 31st July 1997. If Mr Fang is in breach of the settlement agreement in relation to the guarantee, then no doubt the Defendant would consider her remedies.

11. The previous bank guarantee provided that :

"... in consideration of your agreement to postpone payment of HKD1,950,000 - to you by Dr. Fang until you have vacated the flat known as Cavendish Heights, Block 6, Flat 18A 27 Perkins Road Hong Kong"

The duration of the Licence itself must be governed by the terms of the Licence and not something contained in the bank guarantee.

Lump sum payment

12. Irrespective of whether there is a guarantee or not, under the settlement agreement, Mr Fang is required to pay US$250,000 or the equivalent of HK$1,950,000 to the Defendant on her vacating the Property. If Mr Fang fails to honour this agreement, then the Defendant should pursue her remedy against him. Ms Cruden informed the court that the money is now in the client's account of the Plaintiff's solicitors.

13. There are matters raised in the Defendant's affidavit about the conduct and behaviour of Mr Fang. The Defendant said that these matters caused her concern whether the lump sum would be paid if she move out from the Property. I understand the Defendant's concern, but these matters are in my view not relevant to the issue whether the Licence had been validly terminated.

Conclusion

14. In the circumstances, I will grant an Order for vacant possession of the Property and damages for the use of the Property from 1st August 1997 onwards to the date of delivery of vacant possession by the Defendant. The damages have to be assessed by the Master of the High Court. Although the Plaintiff initially claimed for an injunction against the Defendant, Ms Cruden has not pursued with this application. There shall be interest on the damage. The rate of interest is to be dealt with by the Master.

15. Costs of the action is to the Plaintiff on a party and party basis.

(P. Cheung)

Judge of the Court of First Instance,
High Court